The Commonwealth Government has announced that it has directed the Australian Small Business and Family Enterprise Ombudsman to undertake an inquiry into the adequacy of the law to address concerns about small business lending raised by the Parliamentary Joint Committee on Corporations and Financial Services in its report, Impairment of Customer Loans. Background.

The Ombudsman will examine selected cases identified by the Parliamentary Joint Committee as unfair and provide advice to the Government to help determine if further regulatory action is required.

The Ombudsman will provide interim findings to the Review of external dispute resolution schemes in the financial services sector.

The final report is due to be given to the Government by the end of the year.

Terms of Reference

In undertaking the inquiry, the Ombudsman should:
•review a selection of the cases that have been identified by the PJC as unfair and ascertain whether there are any deficiencies in the regulation of authorised deposit taking institutions in lending to small business;
•refer any matters identified in the review to the relevant authority for further consideration as necessary;
•determine whether the regulatory deficiencies identified by the PJC, or additional deficiencies identified through the inquiry, are being addressed by subsequent Government and industry reforms; and
•recommend whether additional reform measures should be implemented (legislation, regulations, guidance and practices) to ensure products perform in the way they should, taking into account that consumers have a responsibility to accept their financial decisions, including market losses, when they have been treated fairly, and any impact on the availability and cost of credit to small business.